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Sloan [31]
3 years ago
14

A person starts her own business after quitting a job in which she made $75,000 a year. Expenses include $100,000 for wages and

salaries, $15,000 for utilities, $150,000 for materials and supplies, and $5000 for gasoline. She uses her own car in her work, for which she paid $16,000 two years earlier. She could rent the car for $5,000 a year. Explicit costs are
a. $195,000
b. $275,000
c. $270,000
d. $286,000
Business
1 answer:
romanna [79]3 years ago
5 0
Explicit costs are business expenses that are easily identifiable and can be accounted for.

1) Wages and salaries = 100,000
2) Utilities expenses = 15,000
3) Materials and Supplies = 150,000
4) Gasoline expense = 5,000

100,000 + 15,000 + 150,000 + 5,000 = 270,000 answer is C.
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Read 2 more answers
During 2019 the Barker Company had a net income of $75,000. Below is information taken from Barker’s last two balance sheets: 20
Kitty [74]

Answer:

cash provided by operating activities  84,000

Explanation:

net income  75,000

Adjustment (A)

gain on land   (500)

depreciation   1,500

Adjusted net income                  76,000

Change in working capital

↑account receivable   (3,000) (B)

↓long term AR             10,000 (C)

↑Account payable         1,000 (D)

Net changes                               8,000

cash provided by operating activities  84,000

<u>Notes:</u>

(A)

The net income may have non-monetary term, we need to remove those to get and adjusted net income on a cash basis

the gain on land is not a monetary term. We will record the proceeds in cash for the sale under investment activities, not operating as the business is not selling land every year.

depreciation is an accounting metric, is not an actual expense, it doesn't involve cash.

(B)

the increasein the Ar means more sales were not collected therefore, less cash collected.

(C)

the decrease in the long term AR  represent the collection, so it increases the cash

(D)

the increase in account payable represent the delay of payment, so company has more cash available.

7 0
2 years ago
During Year 5, Tedd Co. became involved in a tax dispute with the IRS. At December 31, Year 5, Tedd's tax advisor believed that
kkurt [141]

Answer:

$400,000

Explanation:

Since at December 31, Year 5, Tedd's tax advisor believed that an unfavorable outcome was <u>probable</u>. And a <u>reasonable estimate </u>of additional taxes was $400,000 but could be as much as $600,000.

Although after the Year 5 financial statements were issued, Tedd received and accepted an IRS settlement offer of $450,000.

Tedd should have included an amount of $400,000 as accrued liability in its December 31, Year 5 balance sheet

The reason is that according to the International Financial Reporting Standards, a PROVISION must be made as long as the conditions below were obtainable at year end.

- Existing Condition (which in this case is the tax dispute with the IRS)

- Probable Cash Outflow (which Tedd's Tax adviser confirmed)

- Reliable Estimate of Outflow ( which the scenario stated ''A reasonable estimate of additional taxes was $400,000'')

Hence, such 'reasonable estimate is the appropriate amount for inclusion in the financial statements.

5 0
2 years ago
. Tiger Mfg. owns a manufacturing facility that is currently sitting idle. The facility is located on a piece of land that origi
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Answer: $1,200,000

Explanation:

The firm should include $1,200,000 as the cost of the Manufacturing facility for a new project in it's analysis.

This is because $1,200,000 is the opportunity cost of not selling the facility. The old costs that were incurred for the land and the facility are to be considered sunk costs as they have already been incurred and the only relevant cost now is what the market will pay for the facility which is $1,200,000.

4 0
3 years ago
George, a wealthy investor, is uncertain whether he should invest in taxable or tax-exempt bonds. What tax and nontax factors sh
3241004551 [841]

Answer:

The classification including its subject in question is outlined in the section given elsewhere here.

Explanation:

1...

<u>Tax</u>

  • Tax-Exempt Bonds: Municipal bonds gain financially by being able to benefit from income and sales taxes. This will give the company the added value with just paying taxes whenever the moment arises.
  • Taxable Bonds: Nonetheless, taxable bonds allow the borrower to pay county and national taxation, and therefore are usually sold to ventures that do not help the common person.

<u>Rate of Return</u>

  • Tax-Exempt Bonds: Municipal bonds, and perhaps tax-exempt treasuries, bring a lower cost of capital than that of the subject to tax paid great also because the investment company was also tax-exempt.
  • Taxable Bonds: Taxable investors consider a rate of profitability for the market. Because this yield is greater than those of mutual funds, measurements of yields are necessary on a constant schedule.

<u>Net Taxable Income </u>

  • Tax-Exempt Bonds: Throughout comparative analysis with either a municipal bond, developers could receive less profit with a taxable contract however if designers earn a lower profit margin.
  • Taxable Bonds: In comparison to something like a municipal bond, we might also receive less money with such a subject to tax contract even however we are accruing a higher rate of return.

<u>Yield Comparison </u>

  • Tax-Exempt Bonds: The proportion of tax deductible-equivalent production will always be lower than that of the subject to tax production.
  • Taxable Bonds: The portion of taxable-equivalent production would always be significantly greater than that of the exempt yield. It's indeed attributable to the deduction of residential mortgage taxes.

2...

  • The description prepaid benefit applies to any payment received in conjunction with and therefore is specifically due to, a debt that lasts past every end of the following term in which that payment is obtained. We implement the accounting method of the accounts under managerial statements.
  • Incorporation throughout Gross Income gets to decide underneath the accrual ability to earn instead of just receiving the products. Payment method income taxpayers cause prosecutorial misunderstanding over all the natural environment of revenue recognition.
  • The simplification of most courts assumes that revenue may accrue before or on before receipt but have never during the. Extra cash collected to proceed with productivity is therefore taxable instead of receiving.
6 0
3 years ago
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